|Good morning, When it comes to Denis O’Brien, words matter.|
I should know. Exactly four years ago, I spent a week in the witness box in the High Court discussing the meaning and interpretation of words in what ultimately became one of the longest defamation actions in the history of the state.
O’Brien had sued my former employer, the Sunday Business Post, over an investigation by Tom into the biggest borrowers in the country at the time of the bank guarantee. I edited the newspaper at the time, and, along with Tom, thought the investigation was in the public interest.
O’Brien sued. He claimed the articles, including articles headlined “22 men and €26 billion” and “The Gang of 22” wrongly meant he was among a “gang” of 22 borrowers responsible for the destruction of the Irish banking system and that they defamed him and injured his reputation. He also alleged malicious publication and, in that context, sought punitive damages.
The jury did not find in his favour, and O’Brien was left to pick up the costs of the case.
Several things struck me from the case. First, it was the length that O’Brien was willing to go to protect his name. His main business, Digicel, was heavily in debt and bartering with bondholders. Yet, O’Brien was willing to turn up to court for 17 full days (the only time he did not appear was the day the jury struck out his case).
Secondly, it was the importance of words. Because words have meaning, and O’Brien had a different interpretation than we did of the words that were published. It was ultimately what the case distilled down to and, thankfully, the jury ruled in our favour.
However, one word that we can all agree upon about O’Brien is that he is determined.
He has an unfettered determination that propelled him to the ranks of the ultra-rich, and it was that same determination that saw him squander hundreds of millions of euro in ill-fated investments in the media industry.
His determination is unwavering, a determination that helped him to maintain control of Digicel when his bondholders got angsty three years ago, when he managed to negotiate a massive write-down of $1.6 billion on the company’s $7 billion debt pile. It was, perhaps, a similar determination that led to him pulling a flotation of Digicel in 2015, because he viewed the price as too low, and because investors were looking for an equity stake in the business of more than 50 per cent. O’Brien’s determination meant he was not willing to cede a majority holding.
Last week, however, he did just that. The determination pivoted.
On Wednesday, the company announced a deal that would see bondholders take control of the business. Some 40 per cent of Digicel’s current $4.55 billion of outstanding bonds and loans will be moved to equity. O’Brien has essentially agreed to cede control of the telecoms empire he has built over the past 22 years. In return, there will be a “comprehensive restructuring” of the business.
It is important to understand the significance of what has happened. The wealth machine behind the person perennially listed as Ireland’s richest man has been taken over by its creditors. The Irish Times has reported that the creditors will take more than 90 per cent of the business. O’Brien might be able to reclaim some more equity down the line.
The most likely outcome is that the bondholders will install a new management team to prime the business for a sale. O’Brien will remain on the board and will maintain relationships with the various regimes that Digicel is operating in.
However, Denis O’Brien’s Digicel has now become just Digicel.
The transition has been coming for some time now. And there are two specific points to dwell upon.
The first is Burma. Digicel has always been highly leveraged, but its strategy related to growth.
Burma was the last frontier. Its population of 60 million is larger than that of South Korea or South Africa and triple that of Australia. And it was an untapped market commercially.
Back in 2013, Digicel went for the licence to roll out telecoms there. It could have been transformational. At the time, only 5.4 million of the population had a mobile phone subscription.
O’Brien went big for the licence, teaming up with George Soros. However, he lost.
It derailed the growth strategy.
The second issue was the IPO, slated to take place in October 2015. The idea was to raise $2 billion, mainly to pay down debt. O’Brien pulled the plug at the last minute. At the time, the decision was put down to the markets and the pricing; in reality, it was because investors wanted way more equity than O’Brien was willing to cede.
And that determination is fine – until it is not.
In recent days, bondholders were due to be paid significant sums of money. O’Brien fought them down to the last then, but the market is different now. The appetite for so-called junk bonds has altered, and O’Brien’s companies have been impacted heavily by geopolitical issues. Yes, the company was highly leveraged, but the turmoil in its core market of Haiti has not helped.
Overall, however, the issue is determination. Denis O’Brien’s determination helped him build an empire. However, his determination to maintain control of his empire actually helped him lose control of his flagship business.
Elsewhere last week, Francesca reported on the veteran developer and ex-Fianna Fáil donor Tom Bailey. He is at the heart of a multi-million euro lawsuit against a trustee over farmland he allegedly wants to “flip” for the benefit of a family trust.
Tommie reflected on the message Rishi Sunak sent to the DUP through the deal the UK Prime Minister agreed with European Commission President Ursula Von Der Leyen on the Northern Ireland Protocol on Monday. The British government is no longer prepared to let the second largest party in its smallest devolved administration decide the terms and the pace of the UK’s relationship with the EU – but how will Jeffrey Donaldson react?
The €12.4 million judgement entered against the two directors of a collapsed Dublin transport company this week came as no surprise to the readers of Thomas’s investigation when Boxer Logistics went into liquidation last year. Under multiple identities, Bill Henry and Stewart Alexander started and crashed countless companies in the past two decades.
Finally, don’t miss Sinead’s ferocious column on the appointment of Pharrell Williams as creative director at Louis Vuitton. “The message is clear: Don’t bother getting good at that thing you’re trying to do. Just amass followers. Because celebrity. Wins. Out,” she writes. But also: “Everybody. Else. Loses.” Kind regards,
Very Interesting Reading, in the Currency, this Morning.